IDFA calls for policies that promote profitability, not protection

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In her keynote speech at Dairy Forum 2011, Connie Tipton, president and CEO of the International Dairy Foods Association, said the dairy industry, now at a crossroads, has many opportunities for achieving its greatest potential. Noting that industry participants are closer than ever to finding agreement on a package of policy reforms, she challenged industry leaders to focus on policies that will promote growth and profitability rather than protection and limitations. Tipton addressed a record crowd of dairy producers, processors, suppliers and other industry participants gathered at the Doral Golf Resort & Spa in Miami this week for the 26th annual Dairy Forum.

Calling price volatility the "elephant in the room," Tipton explained that every agricultural commodity has price volatility but, unlike dairy, the others have tools and programs in place that help them to navigate the ups and downs. Unfortunately for dairy, current government policies actually exacerbate the volatility, which was painfully evident during what Tipton called the "Great Depression of 2009" for dairy farmers.

"The path to a prosperous future lies not in creating additional government intervention in our markets. Rather, it's by replacing our existing programs with those that protect our farms without forfeiting our opportunity for the future," Tipton said. "Let's take the road well traveled by other commodities, but less traveled by the dairy industry."

She commended the strategic leadership of Tom Gallagher, CEO of Dairy Management Inc., and his vision for creating the Innovation Center for U.S. Dairy. Shortly after its inception, the Center commissioned a comprehensive study of dairy supply and demand around the globe by Bain & Co., which identified a clear path forward for the dairy industry, provided that U.S. dairy policies could be streamlined to promote market growth.

"There's a love affair with dairy around the globe," she said, detailing growing opportunities in China, Japan, South Korea, New Zealand, Argentina, Chile and Ecuador, as well in as the United States. "We must have the guts to move in the right direction."

Tipton also applauded the National Milk Producers Federation and CEO Jerry Kozak for promoting new policies and programs that would encourage growth. But she warned against programs that would bring more government intervention.

"Government controls may sound tempting, but they're like the siren song promising to take away risk that eventually leaves you dashed against the rocks," Tipton said. "The reality is that market factors are pretty darn hard to control, and politicians steering those controls are even more unpredictable,"

Instead, she said IDFA supports an improved margin insurance program to replace programs that no longer work, like the Dairy Product Price Support Program. IDFA also believes that the antiquated Federal Milk Marketing Order system is holding producers back from using modern risk management tools. Tipton called for simplifying the federal orders into a two-class system and urged all industry participants to support a streamlined system that would allow growing markets to thrive.

"We have an opportunity as an industry to change the game, to move from an industry focused on protection and limitations to an industry focused on growth, affordability and profitability," Tipton said. "We look forward to a cooperative approach to developing policies that will allow the U.S. dairy industry to reach its greatest potential."

The full text of Tipton's speech is available here.



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